This Man Ran US Healthcare. He’s Very, Very Concerned. Are You?

NewCo Shift Forum

After leading the team that saved healthcare.gov, Andy Slavitt took the reins of Medicare, Medicaid, and Obamacare. Trump didn’t invite him back, but NewCo Shift Forum did.

Take one look at Andy Slavitt’s Twitter feed, and you’d think he was still running the Center for Medicare and Medicaid, the federal agency responsible for our government’s trillion-dollar healthcare budget. But Slavitt left when Trump showed up — and since then, healthcare has moved from political football to existential conundrum. Slavitt’s a man on a mission — he’s deeply aware of the intricacies, politics, and human costs of getting healthcare policy right, and he’s mad as hell about where things are headed under the Trump administration. We brought him to the NewCo Shift Forum just two weeks after Trump took office. Below is the video and transcript of his conversation with Dr. Jordan Shlain — edited for clarity.

Jordan Shlain: We’re going to have a little chat with Andy Slavitt. Andy, why don’t you come on up?

Andy and I met on a double date, many years ago, just to be clear, here in San Francisco. He was starting a software company. It was called HealthAllies, and he was trying to democratize pricing so that people could have some price transparency in making medical decisions.

I lost touch with Andy shortly after that. The next time I met him was in Washington, DC at some think tank at the Kaiser Family Foundation. He was working at a small $40, $50 billion company called Optum, which had acquired his company, which was nested within UnitedHealth Group, trying to figure out the technology solution to the healthcare hairball.

When Obama got elected, when healthcare.gov, if you remember that thing, broke, they put together a war room to fix it. It was critical to Obama’s Affordable Care Act, and Andy was the one in the war room overseeing the fixing of that.

Upon him fixing that, he was named as the acting administrator of the Center for Medicare and Medicaid, which is very big government. He’s an entrepreneur, big company guy, big government guy. Am I getting this right, so far so good?

Andy Slavitt: I think that’s enough!

Andy, in my experience with him, is a guy that sees things very clearly, but he doesn’t mistake a clear view for a short distance, and will be very honest about how he feels. Having been in DC, it’s obviously very political.

Let’s start with the knife fight that’s going on in DC right now. Let’s just go right there. Maybe you could elaborate. Trump’s elected. He’s trying to gut the Affordable Care Act. There’s so much noise around this. Maybe you could tell us a little about what’s going on in DC right now.

Thanks, Jordan. I think there are a couple dynamics. You’re all observing most of them, so not all of this will be news. I think one of them is clearly the drop off between the rhetoric of campaign versus the reality of governing, which was maybe equivalent to the hype of raising money versus actually having to operate a startup.

It was all well and good, during a campaign season, even for the Republican Congress, to be critical of the ACA. It was an effective talking point. One could argue we, at the Obama Administration, didn’t do a good enough job telling people why it mattered, why the ACA mattered to them, the protections, not just the coverage gains but how this improved their lives.

Nevertheless, once the Republicans won, it became fairly clear that just casting aspersions wasn’t good enough. It’s harder to actually do things than to criticize. There’s probably a dozen adages that say that.

One of the dynamics going on is now you’re really seeing the new administration and, more importantly, the new Congress struggle to figure out what to do and how to carry things forward. It’s not just a policy struggle. It’s also a money struggle, as all things are.

To put a fine point on this, if they repealed the ACA in the fashion that they originally talked about, which was repeal it now, pass a new plan later, not only do you have to come up with new policies in a bipartisan fashion, which is hard enough, but they would essentially take all of the money that supports the ACA, because the ACA paid for itself and then some, and then pass it back in a tax break to high earners.

In order to get another plan, they would have to raise a whole other set of money to pay for it. In this day and age in Washington, you’re talking trillions of dollars. That’s very unlikely to happen.

What you’ve seen more recently over the last few weeks in this knife fight is very centrist folks, Republican governors, Republican senators, actuaries, insurance companies, hospitals, say “Hey wait a minute. This isn’t what you campaigned on. You campaigned on repeal and replace, which implied to all of us you’re going to give us something better.”

You didn’t campaign on, “You’re going to get rid of this thing, and then figure it out later. Figure it out later, put a gun to our heads,” and so forth. People are speaking pretty loudly and saying, “That’s not good enough,” so there’s a scramble.

To put a fine point on that for a second, if they repeal this, they don’t replace it, and they wait, all that money that was going to fund hospitals and care for people, if that goes away, is that not a job killer?

These hospital systems employ a lot of people, and with all that money, how does one square, “We’re going to repeal this,” and, “Oh, by the way, we’re going to kill lots of jobs?” Because health care is a big job generator.

You’re absolutely right, Jordan. Even uncertainty is a job killer. We just saw the January numbers, and there was a 50 percent reduction in hiring in hospitals in January.

I’ve been taking an informal poll of hospitals CEO’s. Forty percent of them told me that they are reducing hiring this year, 30 percent told me they are reducing capital projects and budgets, and about 35 percent have said they’re going to put a halt to their strategic initiatives — just because of uncertainty.

I just talked to a bunch of software companies over the last couple of days since I’ve been in San Francisco. They’ve all said they felt it. They’re all beginning to feel decision-making grind to a halt.

This is what happens when you get to a place where you induce a massive amount of uncertainty about how things are going to go forward. Boards don’t do well with uncertainty. If Medicaid expansion goes away, for most hospital systems, their bad debt will double or triple. Most hospital systems are not going to plan on spending in the meantime.

One of the other things with all the noise that goes on with the Affordable Care Act and coverage is it’s one thing to get coverage and get the actuarial pool great enough, so that the cost goes down and everybody gets something.

On the other side, the stuff that you’ve been doing, that you and I have been talking about for years, this whole concept that we’re moving to what’s called “bundled payments,” MACRA, and alternative payment models, there is a moral hazard when you get paid for doing things. There’s a bigger moral hazard when you make money if you fail at doing what you did in the first place.

If you go to the hospital and get paid $20,000 for a hip replacement, and then you have an infection or there’s a bad outcome, the hospital gets paid $40,000 five days later for that bad outcome. Then if there’s another bad outcome, they get paid $60,000. The runaway train is that there’s a moral hazard, and there’s no moral imperative in healthcare.

One of the things that I applaud you and what you’ve been doing the most is really the stuff that no one reads about. It’s super wonky, but the headline is, “Hey doctors and hospitals, your incomes will equal your outcomes in the future.” The days of fee-for-service and making more money off of sick people, this health sick care system, you have to design a system that focuses on outcomes.

Historically, doctors always knew what the best outcomes were, but the truth is that patients know what good outcomes are, too. Maybe you can talk a little about some of the initiatives around bundles and outcomes, because I think that’s what matters to people.

The system, at various stages, depending on where you are in the country, is going through this massive change management effort, massive and complex. It really changes the way physicians — primary care and specialists — work together, the way physicians at hospitals work together, the way they work with health plans.

In effect, what we’re saying is, “If you coordinate care, if you prevent an illness, if you keep people out of surgery, we should pay you more for those things so we don’t have to pay more down the road.”

This has been a burgeoning effort for the last seven or eight years. But it got really serious a few years ago when we said, as Medicare, the largest payer in the country, that by the end of 2016, we were going to have more than 30 percent of our payments linked to a quality and a cost outcome.

The reason we did that was to signal to other commercial payers and to people practicing medicine, that a tipping point might be coming. We surpassed that hurdle. What we’ve seen, in various stages, just real quickly, a few different forms of models.

There’s the surgical bundles and things of that nature that you talked about, which I think are all about, “How does everybody on a care team take care of an episode better?” There are more population health-based models, like Accountable Care Organizations or medical homes, which are, “How do you give people more up front, so they stay healthy, and you don’t have to pay more later?”

There’s an emerging set of prevention models, which are also on the theme for things that are near and dear to your heart, like diabetes, stroke, high blood pressure, and so forth.

Where does genomics fit into how Medicare views the world? Medicare and Medicaid takes care of old people and poor people, pretty much. There’s everybody else in between.

Francis Collins, Rob Califf, and I led a tri-party monthly team to really focus on, “How can we rapidly get the research, get the products to market, safety, efficacy, and ultimately, coverage?” We’re just at the cusp of figuring that out. The costs to do a (genetic screening) panel have gone down dramatically.

I have told the agency that they need to be ready in the next few years. Every Medicare beneficiary may, in fact, want to have a panel, and we should be able to figure out how to do that. There’s a lot of work to be done there.

There’s a lot to understand, but that is the age that we’ve got to move into. Guess what? We’ve got to do it in a way that actually reduces costs, doesn’t add to costs. We need to figure out how to invest in these sorts of areas that are going to be important.

Excellent. I see some questions. We’ll start over here.

Audience member: My question builds on the point about outcomes. I’m curious. First, I applaud the efforts that you’ve made in moving it so far.

Thank you.

Audience member: With the knife fight that you’ve described, is the trajectory such that that will continue or is that at risk also?

I’ll answer that two ways. One is I think that the new administration is going to be basically committed to following the same path. They’ll take some twists and turns that we wouldn’t have taken. They’ll go a little bit lighter in some areas, particularly things that were more mandatory models that we pushed aggressively, but I think that they’re basically going to continue.

The bigger hazard is the distraction value of the ACA debate and the coverage value. I don’t think most people in the industry have the ability to do both at the same time. We can either have a three-year fight over whether or not we’re going to continue to cover more Americans or we can move forward with a relationship-based, integrated health system. I have a hard time seeing how we are going to do both at once.

Audience member: My name is Maya Rockeymoore at Global Policy Solutions. I’d like to take us to the next level. A lot of the conversation here is about job loss due to technology, the need for basic income to cover people’s needs. Now we’re talking about basic healthcare, which many people need money to pay for, and oftentimes in the past it’s been tied to jobs.

My question is Obamacare covers 20 million more people. Where do we need to be going as a society given what we know is the future of work? In your perch from CMS, how would you actually structure a truly universal healthcare system?

(Young people) have come of age in the last number of years in this gig economy. You get out of school, you can write software, you can perhaps drive an Uber a few hours. You can work on a start up, you can play in a band. You can do a lot of different things.

They weren’t around back before 2008 when basically your number one decision for you and your family was, “Where can I get benefits?” Once you get that taken care of, you can find a job you liked. Restricting the economy by reverting back to that place has a lot of implications for our ability to have the economy move in the way that we want it to move.

The sort of flexibility and mobility only happened because of the ACA, and I think with what we are looking at, that would put it at risk. Just given the time, I won’t dive into your second question, but I’m happy to follow up.

We have a question over here.

Audience member: What’s the future of the health information exchange? It was a big priority for the last administration. There were some progress there, but it’s always been a challenge for patients to be able to move their records between providers from different systems, that sort of thing. Is that dead as a policy going forward? Did we tip it at all in the last administration?

That’s a great question. We actually don’t have a technology problem. We have a business model problem. Quite frankly, we have electronic medical record companies that have siloed data and have taken $40 billion of government money. It’s shameful and it needs to change.

We’ve done a couple of things that are important. One is we have required that, in the next round of technology, they all contain open API’s. That means that we can get physicians who made decisions on their electronic medical records out of the business of being locked into one software.

They can basically buy work flow technology, put it on top of the EMRs. I think that’s great. It will also allow patients to be able to access their data. I would say, the open API’s will help that.

There’s other ways and other methods that companies are using to hoard their data. We actually have a phrase for that and we call it, “Data blocking.” What they’re doing is contract terms and things of that nature. We’ve published even a model contract, which we suggested everybody move their contracts to, so people can do that. It’s a tactical knife fight now because we’ve got the capability to do that.

And there’s a lot of people shaming the companies that aren’t sharing. We have one last question here.

Audience member: Could you talk about what the uncertainty means for the agencies that have to actually implement the law? The ones that did actually implement the Affordable Care Act and the ones that will be responsible for carrying out changes or a replacement, like HHS and CMS?

Before you answer that, also in closing remarks with that, answering that question, what can people do to not let this train go off the track?

I think there’s a very professional team that will execute whatever the laws of the land are. There’s also a political team that is actually working, in many respects, to sabotage the law of the land. It’s a little bit of an uncomfortable environment. I think you’re going to see interesting stories coming out of Justice, State, HHS, wherever you are, about that sort of tension.

Presuming that that happens, the job of the people in the administration, I believe, is to communicate clearly with the external world and tell everybody, “Here’s what’s happening. Here’s what’s coming.” Right now they can’t do that, so we need more clarity on a policy front.

I would tell you that, no matter what you believe, no matter if you believe that Trump’s headed the right direction, no matter if you believe that this policy debate and healthcare is headed in the wrong direction, one thing we’ve all learned in the last few weeks is the power of speaking up and essentially saying, “We are America. Our opinions are America. It’s not whoever’s in the White House.”

I have worked on at least three things where we’ve gotten the administration to change course, because they were pursuing a policy that was, in some cases inadvertently and in some cases purposely, aiming to hurt people. We called them out, put it in the public, and we saw changes happen.

There are, right now, probably ten senators that are probably the most important people in this debate. Communicating as much as possible to those folks about what you believe and what you think should happen is going to be really important. Otherwise, we may be in this period of prolonged uncertainty.